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Bermuda Regulator Issues Virtual Currency Warning

Bermuda Regulator Issues Virtual Currency Warning

Bermuda's financial services regulator, the Bermuda Monetary Authority, has highlighted the investment risks associated with new technologies such as cryptocurrencies in a recent media release.

In particular, the Authority has warned investors that unregulated initial coin offerings (ICO) – sometimes referred to as initial token offerings – are being used as a method of raising funds by start-ups, and, as such, are bypassing the rigorous and regulated capital-raising process required of venture capitalists or banks.

With ICOs, investors are able to use cryptocurrency (such as bitcoin) to purchase coins or tokens via the internet for a set period of time. The ICOs are often global offerings which can be created and accepted anonymously.

Jeremy Cox, CEO of the Authority, said the Authority is closely monitoring global technological developments such as ICOs, but that at present these forms of investment vehicles are not subject to prudential regulation. For this reason potential investors are being encouraged to exercise care when investing.

 

By courtesy of Lowtax

 

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